Where’s the Human Resource Strategy?

May 23, 2017

INTROSPECTIVE by Calixto Chikiamco

Business World | May 22, 2017

One thing I’ve learned as an entrepreneur is that running an organization is 90% human resources. By that I mean people decisions and people management are keys to success. Although there are plenty of business books hyping the importance of strategy, it’s not the key to success because if you have the right people, you, together with your team, can iterate the right strategy.

A human resource strategy, however, doesn’t only mean recruiting the right people. It also means the systems shaping the behavior of people. There’s a saying, for example, that what gets paid, gets done. Thus, if you reward punctuality and punish absenteeism or tardiness, you can expect people to be on time. Another saying is that what gets measured gets done. If you, for example, as a banker, measure only deposit growth but not compliance with AMLA (Anti-money Laundering Act Rules), you will find transgressions of BSP rules.

I highlight the importance of a human resource strategy because it seems to me that President Duterte has a lack of it, leading to the many stumbles of his presidency.

Take his recruitment strategy.

Instead of getting “the best and the brightest,” he has confined most of his appointments up and down the bureaucracy to a small circle of Lex Talionis fraternity brothers, San Beda Law alumni, Davao friends, rabid campaign supporters like Mocha Uson, and a few recomendees from PDP-Laban, former President Arroyo, and Bongbong Marcos.

The stumbles he has had — the unceremonious firing of former DILG Secretary Mike Sueño, the abrupt dismissal of his former campaign spokesman Peter Laviña from the National Irrigation Authority, the appointment and subsequent rejection of Perfecto Yasay as Foreign Affairs Secretary by the Commission on Appointments, and the embarrassing extortion of gambling lord Jack Lam by his fraternity brothers in the Bureau of Immigration — arose from this instinctive, but wrong policy, of only appointing from a small circle without vetting them for competence and integrity.

President Duterte has also built a team with dissonant voices. Former DENR Secretary Gina Lopez fought openly with Finance Secretary Sonny Dominguez. Department of Social Welfare Secretary Judy Taguiwalo criticized the administration’s vital comprehensive tax reform package in front of congressmen. His Agrarian Reform and Agriculture Secretaries come out with policies and programs in conflict with the economic team’s policies and direction.

Also, President Duterte may be accused of mere blustering if he doesn’t follow up his tirades against so-called “oligarchs” with the right organizational strategy.

For example, he has accused the family which owns the Philippine Daily Inquirer of being tax cheats and refusing to give back government land. However, if he doesn’t get to have his government team to organize competent lawyers to file and prosecute the case, then it’s all just bluster. Asking the leftist organizations to occupy the contested lands is the lazy way of doing it .

In addition, President Duterte’s “build, build, build” mantra suffers from the lack of a human resource strategy. After all, it’s people who will supervise and build infrastructure. The policy is too focused on the financing part, but not on the organizations and people who will implement it.

Just look at the Department of Transportation, a key unit in implementing “build, build, build.” There’s a fast turnover and turmoil in that organization, with resignations of key people hitting that department. I understand that there are three vacant key undersecretary positions.

To be fair, the Department of Transportation under the previous administration was worse. Not only did Mar Roxas and Jun Abaya just appoint lawyers, they also exercised poor leadership, putting politics above public interest.

It’s the lack of competent and fairly behaved people in government that makes me skeptical of this wrong-headed turn of the administration toward ODA financing and hybrid PPPs for building major infrastructure projects. Our experience with failed, delayed, costly, and corruption-riddled ODA projects — SCTex, Subic Port, Northrail, NBN-ZTE — tells me that government doesn’t have the competent and motivated people and the human resource systems to build and supervise infrastructure projects on time and on budget. On the other hand, PPP projects — TPLEx, the San Miguel-built airport lanes — have been fairly successful without cost to government. Why? Because the private sector imposes the discipline of the profit motive on its people to deliver the project at cost and on time. I can’t say the same thing of government where there are no accountabilities. A lot of government malefactors are still on the loose.

To be fair, I think President Duterte is learning, the appointment of Mocha Uson as assistant secretary being the exception. He has appointed outside of his small circle of Davao friends, two retired generals to his Cabinet, namely, Roy Cimatu as Department of Environment and Natural Resources (DENR) secretary and Ed Año as Department of Local Government (DILG) secretary.

Now, appointing ex-generals could be a good thing or a bad thing. It’s true that some of them have been associated with corruption (think pabaon and pasalubong for military chiefs as divulged by former military budget officer George Rabusa) but a number of them are highly competent and professional. Unknown to many, the Armed Forces of the Philippines is the unit of the bureaucracy with the most educated and trained professionals. Those who are alumni of the Philippine Military Academy were government scholars who entered via competitive examinations. To advance to higher ranks, officers have to have master’s degrees and undergo numerous training. Roy Cimatu, for example, took up engineering before entering the PMA. He also holds an MBA from Ateneo. Colonels and generals are rotated and have experience managing large military units.

Although appointing so many retired generals in the government may not be best policy, President Duterte may have felt compelled to turn to the retired generals who are more experienced and more skilled than his Davao-based supporters.

Also, in the most significant appointment of his term, President Duterte reached outside of his small circle of Davao friends, San Beda Law alumni, and politically sponsored wannabes, to name Deputy Governor Nestor Espenilla, Jr. to the vital post of Bangko Sentral Governor, succeeding the highly acclaimed Say Tetangco. The fact that Duterte appointed Espenilla, clearly the best man for the job, despite the latter being a classmate of former President Aquino and despite lacking the backing of a powerful political sponsor, is highly commendable and shows President Duterte is learning about the importance of human resource decisions.

President’ Duterte’s officials have been chanting the mantra of “build, build, build” and projecting a “Golden Age of Infrastructure.” I would rather have a Golden Age of Government, with the right human resource strategy as its core.

Calixto V. Chikiamco is a board director of the Institute for Development and Econometric Analysis.